Slowdown poses challenges to GECs' 10+2 ad rate hike plans

TRAI's ad cap, scheduled to be implemented in Oct, is likely to encounter ripples of the economic uncertainty, impairing b'casters' plans to increase ad rates. Top advertisers confirm that they are buying inventories only at previous prices

e4m by Abhinav Trivedi
Updated: Sep 24, 2013 8:06 AM
Slowdown poses challenges to GECs' 10+2 ad rate hike plans

TRAI’s ad cap, which is scheduled to be implemented from October 2013, is likely to encounter the ripples of the economic slowdown. The bleak environment and dip in sales in leading sectors such as auto, consumer durables and FMCG might affect the 10+2 ad cap in the broadcasting space. It is learnt from reliable sources that channels are divided over the implementation of the cap and the entire environment is ‘fluid’ and unorganised.

Major broadcasters are themselves divided on the idea of implementing the ad cap and in effect hiking rates. Top advertisers confirmed that they are getting inventories at previous prices.

“Some channels are moving towards ad rate hike and implementation of 10+2, while some are opposing it vehemently. Although no advertiser is catering to increased ad rate in this environment of economic uncertainty, the channels are themselves divided over the implementation of 10+2. There is no clarity over anything, and at the end, it is all depends on how better one can negotiate. I think in 10-15 days, the situation might be clear. But as of now, there is no clarity and we are buying inventories at the prices we were buying earlier,” said Mayank Shah, GM – Products, Parle.

Arshad Nizam, Director, Alliance Advertising mentioned, “The scenario is cluttered and rates are being customised for individual advertisers. But we are buying spots only at the previous prices. Neither big nor small advertiser is catering to an increase in the rates.”

Frequency channels will definitely not support the ad cap. It is against the fundamental aspect of their business. As far as we are concerned, we are buying spots, but there is no question of an increased price. We are buying at the price which we were buying earlier, shared Sandipan Ghosh, AVP Marketing, Ruchi Soya.

It is also learnt that a leading movie channel recently found no takers when it tried to sell the inventories of full day movies in the name of ‘Festive offer bonanza’ at an increased price. No marketer was ready to accept the increased ad rate, and it is learnt that the channel had to retort to the original price.

Broadcasters resort to ‘Juggad’
Since marketers are not catering to the increased rate of inventories triggered by the regulation, major channels are deploying various tactics. A leading marketer mentioned, “There are various options emerging. A leading broadcaster is pitching for 12+2 in place of 10+2 minutes of advertising in an hour. Another tactic which has emerged in recent times is the gambling around big shows. Channels have come with a ‘Juggad’ technique of demanding premium rates from advertisers for inventories of a big or high profile show on that channel, and giving a discount on other inventories on the same channel or other channels in the same network.”

This practice has been confirmed by more than two advertisers. Another fact which has come into limelight is that a leading media agency has issued a diktat to its buyers for not catering to the increased ad rate. “A leading sponsor recently withdrew sponsorship from one of the big shows. The fall-out happened at the very last stage; another sponsor was brought on board but negotiations could not materialize,” shared an advertiser, on condition of anonymity.

Is 10+2 cap on from October?
The chance of 10+2 ad cap implementation from October is very bleak. News channels have managed to get a stay. Music broadcasters are voluntarily refusing to accept it.  GECs on the other hand are still not clear. Some have a policy of wait and watch, while some are keen on the self regulation of 10+2 so that they can increase their inventory cost, a leading marketer confirmed.

One cannot deduce on what is the way forward and how the industry will respond to the developments, but experts believe that the present economic scenario is difficult for everybody. Therefore, where broadcasters will lose revenue in case they increase the ad rates, advertisers will find it difficult to invest in the broadcast space.

It has been learnt that post the ad rate hike by some broadcasters, there has been a 10 per cent increase in the spending on the print media, which is seen as a good replacement option by advertisers.

It is also believed that the cap might be shifted to post the elections, as reports of the Government trying to stifle the broadcaster media on revenue before elections have also come to limelight.

As stakeholders are in a tizzy and the environment over 10+2 is that of customisation and confusion, experts believe that situation will be clear in times to come, but October is definitely not the right time to introduce the ad cap.

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